The Euro and the Japanese yen stabilized against the US dollar on Thursday after Donald Trump’s administration postponed imposing customs tariffs on imports of cars and car parts by six months.
However, the uncertainty of the Sino-American trade war still keeps the US dollar under pressure.
The US dollar index, which measures the strength of the greenback against a basket of six major currencies, is almost unchanged at 97.542 points after yesterday’s moderate gains.
The weekly upside of the US dollar index (DXY) remains well in place, although gains appear so far limited by the 97.70 region. The greenback needs to surpass, initially, 98.10 (May 3 high) in order to get a chance to re-visit 2019 highs in the 98.30-98.35 band. Furthermore, the positive outlook on the index should remain unchanged above the key 200-day SMA at 96.33 and the +3-month support line at 96.43.
The Euro rose by 0.1% to 1.1208 USD, appreciating from 1.1178 USD overnight. The European currency suffered a serious hit yesterday after the Italian Deputy Prime Minister Matteo Salvini criticized the European Union’s budget rules.
The long-term outlook for the euro is not particularly bright given the weak economic data of the region. The news of the delay in importing US car tariffs helps the Euro get more support at the 1.1200 USD threshold, but it is unclear how long it will resist.
During today’s morning, the pair raised to the resistance level formed by a combination of the 100-hour SMA, the weekly and monthly PPs at 1.1220. If the given resistance holds, it is expected, that a reversal south could occur, and the exchange rate could re-test the given support.
However, note, that the rate is supported by the 55– and 200-hour moving averages at 1.1212. Thus, the rate could breach the given resistance and reach the psychological level at the 1.1240 mark.
The USD/JPY exchange rate fell 0.1% to 109.485 JPY.
The US dollar retreated to 109,151 JPY, which is perceived as a safe haven, as US government bond yields have fallen because of weaker data on US retail sales and industrial output in April. China also reported surprisingly lower growth in retail and industrial output in April, while the discouraging data from the two largest economies in the world make investors more cautious about risky assets.
During the previous trading session, the USD/JPY currency pair traded sideways between the weekly Support high and the 50% Fibo retracements rate, located 109.32 and 109.58 respectively.
The pair is trading near the upper boundary of the short-term descending channel, thus, from a theoretical point of view, it is likely, that a reversal south could occur in the short run.
Also, note, that the exchange rate is pressured by the 55– and 100-hour moving averages at 109.57, thus, from a technical perspective, it is unlikely, that a breakout north could occur in the nearest future.
The Australian dollar fell by 0.25% to 0.6913 USD. The Australian dropped to its low of 0.6893 USD, which was the weakest since early January, as Thursday’s data showed Australia’s unemployment rate reached an 8-month high in April.
The lack of data on jobs has increased the expectation that the Reserve Bank of Australia will soon be forced to cut interest rates.
Public opinion polls show that the Australian Liberal-National Coalition is likely to be defeated by the opposition Labor party in the weekend’s parliamentary elections, and speculation about job data has given rise to criticism of ruling parties that have steadily led their campaign for stable economic management.
The Australian dollar depreciated about 41 base points against the US Dollar on Wednesday. The currency pair breached a support level formed by the weekly S2 at 0.6918 during yesterday’s session.
By and large, the AUD/USD exchange rate is likely to continue its downside movement today. Bears could target a support cluster set by the weekly and the monthly pivot points at 0.6874.
Although, the currency exchange rate could make an upside movement today and aim for a mini swing high of 0.6959 during the following trading session.